China's new generation of leaders led by party chief Xi Jinping said Tuesday that urbanization and the construction of public housing in the country would be stepped up.

The Communist Party's powerful 25-member Politburo also said that China's economy is stabilizing but "faces various challenges that should not be underestimated" next year, according to state-run Xinhua News Agency. Beijing will fine-tune economic policies at "an appropriate time and in an appropriate way," Xinhua said, without giving further details.

The European index rose 0.4% to 123.49.

Shares of Nokia Corp. (NOK, NOK1V.HE) put in a strong performance, surging 13% to $3.88 after the Finnish mobile-phone maker said it is launching a new Windows-based Lumia handset in partnership with China's biggest operator, China Mobile Ltd. (CHL, K3PD.SG, 0941.HK).